I know I know, #firstworldproblems ... but some markets like where I live in Orlando, FL, driving is a pain in the arse (not a walkable city), so I just pony up the $5 for the digital rental to save me the hassle.
Maybe you don't buy groceries, but I do. I need to eat, so I buy food from a grocery store. Conveniently enough, my local RedBox is located at my local grocery store. There's always something I can buy there to restock my refrigerator or panty. And if I wanted to watch RedBox movies, it'd be very convenient because I could pick it up there, along with some food.
If driving to your local grocery store is such a pain, you might want to re-evaluate your choice of city to live in. I've lived in a bunch of different places around the US and never seen a place where just getting to the local grocery store was that much time or trouble. (Work, sure, because the commute can be long and rush-hour traffic congested, but not the grocery store.)
I feel that queuing up a guaranteed watching experience from Amazon is worth the hassle of an extra few bucks compared to getting in my car and driving somewhere. (Yes, I assume I could walk or ride my bike. I've never actually been to a nearby RedBox so I don't know how far it is.)
Still possible for it to not have a movie you want, but at least you'd know that before leaving the house.
If you're OK with having a price tag and sharing restrictions on digital content in the first place (most likely involving some kind of DRM), why not let them set different prices on different versions of it?
I'm on the fence myself. I dislike DRM in principle, but movies and TV shows need to be funded somehow, and I hate ads, so I'm happy to pay a reasonable price.
I found that BBC sell HD content for [~40%] more - which to me is crazy if it's more than a few pence more, all the people are paying for at the sale end is the cost of a little more storage. In a way the SD should be more as you have to transcode it, they're filming it in HD already.
Remember going to Blockbuster and then discovering the movie you wanted wasn't in stock? Along with the 2nd and 3rd options in your mind? I don't know about you, but I went home empty handed several times. (Yes, I had already gone through the greatly limited back catalog of interesting movies at all my local movie stores).